A simple living trust can help you to avoid the probate process. When you create one, you will need to decide who you will name to serve as your successor trustee. This is a person who will manage the assets in your trust after you die. Your successor trustee may also take over your trust assets if you become incapacitated at some point. Elder Care Direction can help you to figure out who you should name as a successor trustee when you create a living trust. It is important that you understand what a successor trustee does so that you can make the best choice.
What does a successor trustee do?
A successor trustee will not take over the management of your trust until you are no longer able to do so. When you are unable to manage your trust assets because of incapacitation, your successor trustee will start managing them for you. After you die, the successor trustee will distribute your assets according to the provisions of your trust.
Incapacitation
Some people suffer serious illnesses or accidents that leave them incapacitated and unable to make decisions for themselves. If you become incapacitated, your successor trustee will be responsible for managing and investing your trust assets. He or she will also be responsible for spending money in your trust on your behalf. This makes it crucial that the trustee you choose is someone who will keep your assets separated from his or her own and is someone who is very honest. A successor trustee is required to comply with state law and may have to diversify your investments.
Depending on what occurs, a successor trustee may have the responsibility to manage your trust for years. If that happened, your trustee would be required to file annual trust tax returns as well as to make important decisions about spending and investments. Serving as a trustee can involve significant amounts of work.
After you die
A simple living trust is not created in a way to continue on after you die. When you pass away, your successor trustee will have to inventory, gather, and keep your trust assets safe. he or she will then need to distribute them to the beneficiaries that you have named in your trust documents. If you also have a will, the trustee might need to work with the executor to handle assets that were separate from the trust and to pay and file your final income tax return.
Choosing a friend or family member
Many people choose an adult child or spouse to serve as a successor trustee. In most cases, serving as a successor trustee only takes a few months when he or she steps in after you die.
Your family situation may affect how well things work. For example, your spouse might have a difficult time serving as a successor trustee if he or she is grieving your loss. If you choose a grown child, you will need to make certain that the child that you choose is detail-oriented, honest, and fair. Your successor trustee must be willing to find good advisers if he or she is not a financial expert. While your trustee does not need to live in your state, choosing someone who is nearby may make the job easier to handle.
Choosing a corporate trustee
If you do not have a family member that you believe could serve as a successor trustee, you can possibly choose a corporate trustee to manage your trust. A corporate trustee may be helpful if your assets are very valuable. It doesn’t make much sense to pay the fees of a corporate trustee to simply distribute your assets from a simple probate-avoidance trust, however. Most trust companies will not accept trust accounts that are worth less than a minimum amount that typically ranges from $500,000 to $1 million, and they charge percentages of your account’s value as a fee.
Naming co-trustees
Some people name a family member as well as a professional to serve as co-trustee. This can either work out well or work out badly. You would still need to worry about the fees charged by the corporate trustee, and your family member would still have to deal with substantial responsibilities.
Learn more with Elder Care Direction
Choosing a successor trustee is important. The person or people that you choose must be trustworthy so that your trust assets are managed properly and your wishes are followed. To learn more about naming successor trustees, contact Elder Care Direction by filling out our online contact form.
